Eli5: Why is the Japanese economy such an anomaly?

Question

I’ve heard the quote attributed to Simon Kuznets
“There are four kinds of countries in the world: developed countries, undeveloped countries, Japan and Argentina”. I’m able to understanding the piece about Argentina and why Argentina has always seemed to suffer from hyperinflation but…

I don’t understand the Japanese economy. Why is inflation so consistently low and almost deflationary? What about the Japanese economy makes it an outlier?

In: Economics

Answer 1

Not an economist, but my understanding is that the Japanese savings rate is insane. This keeps inflation low, sometimes no matter what the central bank does, because inflation requires spending. If I remember correctly, even when the effective interest rate was negative, Japanese people still saved.